Civil litigation: Mitchell costs

Mitchell v News Group Newspapers Ltd: Court of Appeal, Civil Division: 27 November 2013

Rule 3.9(1) of the Civil Procedure Rules provides: ‘On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.’

The claimant issued proceedings against the defendant alleging defamation. The proceedings were subject to CPR PD51D Defamation Proceedings Costs Management Scheme, which provided, inter alia, that the parties had to exchange and lodge their costs budget not less than seven days before the date of the hearing for which the costs budget was required. The defendant filed its costs budget within the prescribed period.

However, the claimant did not file his costs budget until the day before the case management and costs budget hearing. As a result, at that hearing, the Master stated that there was insufficient time to consider the claimant’s budget. Solicitors acting for the claimant informed the Master that the reason why the budget had not been filed until the previous day was due to pressure of litigation elsewhere in the firm. The Master held that there was a mandatory sanction that, where a party failed to file a costs budget within seven days prior to the date of the first hearing, the party was deemed to have filed a budget that was limited to court fees. Accordingly, by her first judgment, the Master made an order to that effect.

The Master permitted the claimant to apply for relief from sanctions at a further hearing. The claimant duly applied for relief pursuant to CPR 3.9, submitting that the defendant had suffered no prejudice as a result of the claimant’s defaults and that, if relief were refused, the defendant would receive a windfall in the form of costs protection. The Master considered the changes to CPR 3.9, which had followed the Jackson report, and held that the new overriding objective and wording in CPR 3.9 highlighted the emphasis to be placed on rule compliance. The Master held that, applying the stricter approach to CPR 3.9, the application for relief from the sanction imposed in her earlier decision would be dismissed. The claimant appealed.

The claimant submitted, inter alia, that the Master had been wrong to refuse to grant relief from sanctions pursuant to CPR 3.9. The appeal would be dismissed.

The obligations in CPR 3.9 to consider the need for litigation to be conducted efficiently and at proportionate cost, and to enforce compliance with rules, practice directions and court orders, was a deliberate shift in emphasis from the previous wording of CPR 3.9. Those considerations had to be regarded as of paramount importance and given great weight. The following was guidance as to how the new approach should be applied in practice: it would usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order.

If that could properly be regarded as trivial, the court would usually grant relief provided that an application was made promptly. If the non-compliance could not be characterised as trivial, then the burden was on the defaulting party to persuade the court to grant relief. The court would want to consider why the default occurred. If there was a good reason for it, the court would be likely to decide that relief should be granted (see [36], [40], [41] of the judgment).

The need to comply with rules, practice directions and court orders was essential if litigation was to be conducted in an efficient manner. If departures were tolerated, then the relaxed approach to civil litigation which the reforms were intended to change would continue (see [41] of the judgment).

In the present case, the Master had not misdirected herself in any material respect, nor did she reach a conclusion that had not been open to her. The Master’s decision had been robust. However, she had been right to focus on the essential elements of the new regime. The defaults by the claimant had not been minor or trivial and there was no good excuse for them. They had resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants (see [59] of the judgment).

Raayan Al Iraq Co Ltd et al v Trans Victory Marine Inc et al [2013] All ER (D) 225 (Nov) criticised; Wyche v Careforce Group Plc [2013] EWHC 3282 (Comm) criticised.

Per curiam: ‘The new more robust approach that we have outlined above will mean that from now on relief from sanctions should be granted more sparingly than previously. There will be some lawyers who have conducted litigation in the belief that what Sir Rupert Jackson described as “the culture of delay and non-compliance” will continue despite the introduction of the Jackson reforms. But the Implementation Lectures given well before 1 April 2013 were widely publicised. No lawyer should have been in any doubt as to what was coming. We accept that changes in litigation culture will not occur overnight. But we believe that the wide publicity that is likely to be given to this judgment should ensure that the necessary changes will take place before long’ (see [46] of the judgment).

Decision of Master McCloud [2013] EWHC 2179 (QB) affirmed. Decision of Master McCloud [2013] EWHC 2355 (QB) affirmed.

Simon Brown QC and Richard Wilkinson (instructed by Atkins Thomson Solicitors) for the claimant; Nicholas Bacon QC and Roger Mallalieu (instructed by Simons Muirhead and Burton Solicitors) for the defendant.